“Acting As Political Human Shields”: The Upper Middle Class Needs To Stop Coddling The 1 Percent
The most criticism I’ve ever received as a writer came from articles suggesting that we curtail tax expenditures that mainly benefit the rich, like the mortgage interest deduction or 529 college savings accounts. (Okay, second-most — the top hate mail–getter, by a large margin, was a quite different issue.)
Why? As President Obama himself found last week, the last people you want to piss off are members of the upper middle class, who are set to a hair trigger when it comes to their personal government handouts. As Paul Waldman writes, they may be “the single most dangerous constituency to anger,” because a) unlike the 1 percent, they are relatively numerous; and b) like the 1 percent, they have a lot of disposable income, which politicians love.
On one level, this is an understandable reaction to a threat to personal economic interest. But on another, members of the upper middle class are being played for fools. They are acting as political human shields for the top 1 percent, which claims more of these benefits proportionally speaking and has been raking in essentially all the benefits of economic growth. The upper middle class (let’s define this as the top income quintile, minus the top 1 percent) ought to demand a lot more than it is getting.
To start, let’s get one thing straight. Tax expenditures are indeed government benefits, economically identical to direct government spending. Preferential treatment in the tax code is just another way of jiggering the national economic structure to direct benefits to one group or another.
Not all tax expenditures are equally terrible. According to a CBO analysis, exclusions for health care and pensions are spread relatively equitably across the population, while the Earned Income Tax Credit and Child Tax Credit are major bulwarks against poverty.
However, the big deductions are unfairly skewed. Two-thirds of taxpayers can’t even use the mortgage interest deduction, because you have to itemize your deductions to get it; other countries manage high rates of homeownership without the subsidy. Overall, 1 percenters get 15 percent of the mortgage interest deduction, 30 percent of the state tax deduction, and 38 percent of the charitable contribution deduction.
Preferential tax rates for capital gains and dividends, meanwhile, are even worse. Over two-thirds of the benefits go to 1 percenters. The supposed idea is to incentivize investment and thus economic growth, but there is zero evidence this actually happens. Close analysis of the Bush administration’s cut on dividend taxes finds that it did not change anything except payouts to shareholders. Longer-term studies on capital gains tax rates finds no relationship to investment or broader economic growth. The major effect is a booming industry in legal chicanery allowing people to reclassify regular income as capital gains.
Meanwhile, over the last generation, 1 percenters have been capturing the vast bulk of economic growth, a trend that is only getting worse. Indeed, according to a new analysis at the Economic Policy Institute by Mark Price and Estelle Sommeiller, from 2009 to 2012 1 percenters literally received more than all the income growth. Because the incomes of the 99 percent fell on average, 1 percenters got 105.5 percent of real income growth. Policies that benefit the very top over everyone else are clearly to blame.
Clearly, that’s no good for anyone who isn’t in the 1 percent, including the merely affluent. But with the middle class lacking much punching power, and the poor largely ignored by everyone, the upper middle class really ought to be asking for more than the preservation of their existing government benefits. At the very least, the upper middle class could demand a cut of economic growth.
And if the upper middle class were willing to ally with the bottom and the middle, there’s reason to think it would be able to keep the structure of its current benefits (that is to say, access to college instead of merely some money to pay for it) while cutting everyone in on economic growth. Taxes might go up somewhat, but that would likely be compensated by better wages and universal benefits.
On the other hand, if the upper middle class can manage nothing but a hysterical defense of its own welfare handouts, and the American system keeps brutalizing the bottom half of the income ladder, a genuine mass movement could appear, as it has in the past. Such movements are not likely to be especially concerned with the upper middle class.
By: Ryan Cooper, The Week, February 2, 2015
“The Plutocrat Politburo”: The Koch Brothers Don’t Care If You Care About Their Plans To Buy 2016 Election
The Koch brothers are done being shy. That’s the conclusion one would have to draw from the fact that they just announced that they hope to spend $889 million on the 2016 election, an unprecedented amount of outside money. It won’t all be theirs — they’re assembling a kind of Plutocrat Politburo, a group of billionaires and zillionaires who will contribute to the cause — but with a combined worth of over $80 billion, they’ll surely be the ones opening their ample wallets the widest and determining the strategy and the agenda.
But unlike some previous reporting on Charles and David’s political efforts, this revelation — which comes from a gathering in beautiful Rancho Mirage of Freedom Partners, the organization through which the Kochs and their allies will distribute all these millions — didn’t require any secret meetings with anonymous sources to unearth. They just told everyone. Here’s the Post’s story on it, here’s the New York Times’ story on it, and here’s Politico’s story on it, all complete with ample details and on-the-record quotes. Reporters may not have been invited into the private meetings at the gathering, but they were allowed to hang around and talk to the participants. And no fewer than four potential GOP presidential candidates (Scott Walker, Rand Paul, Marco Rubio, and Ted Cruz) showed up as well, obviously unconcerned about any charge that they’re kowtowing to the uber-rich.
So the Kochs appear to have concluded that the efforts by Democrats (especially Harry Reid) to turn the Koch name into a symbol of everything that’s wrong in American politics have failed. No longer must they cower in their mansions and take pains to conceal their political spending, fearful of the piercing barbs aimed by liberal politicians and commentators, when all they want is for Americans to fully appreciate the majesty of laissez-faire economics. Free at last, free at last, thank Citizens United, they’re free at last.
If you were expecting journalists to express much consternation at the idea that a group of the super-wealthy are openly announcing their intention to buy the next election, you’ll be disappointed. Instead, the news is being reported more like that of a record-breaking contract for a professional athlete: wonder at the sums involved, but precious little moral outrage. That’s mostly because political reporters tend to believe that election campaigns are already nothing but a parade of deception and manipulation, an enterprise that’s inherently corrupt. So what’s a little more corruption?
There’s no doubt that the behind-the-scenes machinations are fascinating to anyone interested in politics. By putting themselves on par with or even above the parties, the Kochs will make the conflict within the Republican Party even more complex, and potentially vicious, than it already was. Ken Vogel of Politico described the move as “a show of dominance to rival factions on the right, including the Republican National Committee.” What happens when the insurgents are even better funded than what we’ve taken to calling the establishment? It will certainly be interesting to find out.
In any case, the Kochs are probably right that they have little to lose by being public about their plans. Yes, they’ll have to absorb some stern editorials, and maybe even some ads from the DNC criticizing Republican politicians for associating with them. But weighed against what they have to gain by putting nearly a billion dollars into the next presidential campaign — more than the two parties spent, combined, in 2012 — that’s a price so small it’s barely worth worrying about.
In his 2003 novel Jennifer Government, Max Barry imagines a future in which the penetration of capitalism and marketing has become so total that people take the names of their corporate employers as their own last names; characters are called things like John Nike, Nathaniel ExxonMobil, and Calvin McDonalds.
We may not have gotten quite that far yet, but the next Republican president — whether that person is elected in 2016 or after — will have been sponsored, supported, elevated, and outfitted by the Koch brothers and their friends. Should a Republican candidate they don’t like show promise in the primaries, he will surely be crushed by the awesome machine they’re building. The winner may not take their name (Scott Walker-Koch, perhaps?), but he or she will be in their debt to a degree we have not previously contemplated. And the consensus will be that that’s just how things work now.
By: Paul Waldman, Senior Writer, The American Prospect; Contributor, The Plum Line, The Washington Post, January 27, 2015
“GOP Thinks The 47 Percent Aren’t Trying Hard Enough”: News Flash, Middle-Class Rowboats Are Taking On Water
Remember the “47 percent”?
During his 2012 campaign for the presidency, Mitt Romney was caught on tape describing nearly half the country in disparaging terms, labeling them moochers who want handouts. They are voters “who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it,” he said.
Romney’s remarks — and he stood by them immediately after his election defeat — didn’t just damage him; they also sullied the entire Republican Party, reinforcing its image as the lapdog of the very rich. Even now, as some of its strategists push hard for the GOP to reach out to ordinary working folks, its congressional leaders continue to protect the 1 percent.
If President Obama has no hope for passage of his ambitious program of “middle-class economics,” as he called it during last week’s State of the Union speech, at least he has a plan. His proposals for free community college, increasing the minimum wage and providing tax cuts to families in the middle of the economic spectrum have the advantage of recognizing the reality of income inequality.
So far, his GOP critics continue to resist that reality, sticking to the old Reagan-era bromide that a “rising tide lifts all boats.” Perhaps that’s true, but those middle-class rowboats are taking on water even as the rich float along comfortably in their yachts.
The growing gap between the haves and the have-nots is one of the most critical issues of our time, a dispiriting trend that has struck most Western economies. Because of complex forces, especially globalization and technology, the incomes of ordinary workers are falling further and further behind, even as the rich get, well, richer.
That’s not the fault of Democrats or Republicans, Libertarians or Socialists. Nor did this growing inequality start with the Great Recession. It started way back in the 1970s, as the factories that had powered the middle class started to shut down. American steel mills closed; textile mills went away; automotive plants moved out. The trends have simply accelerated since then, as robots power assembly lines and low-wage workers in places like Bangladesh sew garments once made in Maine and North Carolina.
Even now, in a resurgent economy, many families haven’t regained their footing. Their savings accounts have evaporated. They can’t replace the house they lost to foreclosure. They work two or three part-time jobs without benefits. And even those with full-time jobs aren’t living it up. According to The New York Times, the median weekly wage for full-time workers at the end of 2014 was $796, below the levels in 2009, when the expansion began.
Those workers are hardly moochers. They are struggling to find their way in a world where their skills have less value. They need help from a government that knows its role is to lend a hand, to steady the ladder, to help them find a toehold.
Even Romney, who is making noises about running again, has finally gotten the message. He has at least called for an increase in the minimum wage.
But most Republicans can’t get over the notion that those who haven’t made it simply aren’t trying hard enough, that if you’re stuck on the economic margins, it’s your own fault. Their allegiance to the very rich — people like the billionaire Koch brothers — overrides any concern for the vast middle.
Take their insistence on resisting tax increases for the 1 percent — a plan proposed by Obama to pay for tax cuts for the middle and working classes. Republicans claim any tax hikes would kill the recovery. But that’s not so. George W. Bush’s tax cuts led to no new job growth, while Bill Clinton, who raised taxes, presided over a period of widespread prosperity.
So what do Republicans propose? So far, they’ve pushed building the Keystone pipeline, which would create about 42,000 jobs over a period of two years, but only about 35 permanent jobs. And, of course, the GOP still wants to kill Obamacare, a strategy that would create zero jobs.
That’s not much better than dismissing the 47 percent.
By: Cynthia Tucker, The National Memo, January 24, 2015
“The 100 Rich People Who Run America”: The Ultra-Wealthy Have Taken Over The Political System
We are well past the point that anyone will be shocked or even surprised by how distorted our system of funding campaigns has become, but thanks to some excellent reporting by Ken Vogel at Politico, we now have some interesting new perspective.
We have reached a tipping point where mega donors completely dominate the landscape. The 100 largest donors in the 2014 cycle gave almost as much money to candidates as the 4.75 million people who gave $200 or less (and certainly that number goes from “almost” to “more” if we could include contributions that are not required by law to be disclosed).
Think about this for a minute. This is consequential. It means that candidates running for office are genuflecting before an audience of 100 wealthy individuals to fuel their campaigns. So, whose bidding do we think these candidates are going to do? Is it any wonder that the interests of large corporations and unions get to the front of the line?
Liberal Democrats like to blow their bugles about how all the big money in politics comes from rich Republicans. Actually, as Vogel points out, 52 of the 100 top donors are Democrats, and the No. 1 donor by far is Democrat Tom Steyer, who chipped in $74 million.
At least we’ve achieved some bipartisanship somewhere in our political ecosphere. Both parties are now equal opportunity offenders when it comes to gaming the system.
But I don’t fault Steyer or the Koch brothers for trying to exert their influence on politics and public policy. They have strongly held beliefs and issues they care about deeply, and they are simply spending a lot of their money to try and change things in a direction they believe would be better. Nothing illegal or unethical about that.
But let’s call the system that Citizens United and other rulings and laws have created what it is: an oligarchy. The system is controlled by a handful of ultra-wealthy people, most of whom got rich from the system and who will get richer from the system.
Supporters of the system believe that the $3.67 billion we spent on elections last cycle isn’t really all that much money. An Arkansas poultry company owner and big time political donor, Ronnie Cameron, reflected to Vogel that it’s not so different today than it’s been in the past when, “Our country was founded by the wealthy landowners having the authority and representing all the people.”
He said that out loud. To a reporter. Knowing other people might read those words. Without any apparent irony. Imagine all the poor Americans who will sleep better knowing that a rich Southern chicken farmer is happy to represent their interests.
Vogel gets to the heart of the problem though, reporting that, “When all the donations are tallied and analyzed, 2014 is likely to be noteworthy for two other milestones on the opposite end of the spectrum from the growth of mega-donations: It’s on pace to be the first mid-term election since 1990—the earliest cycle for which the Center for Responsive Politics performed such an analysis—in which the overall number of traceable donations declined. It’s also likely to be the first midterm since 1990 when the candidates’ campaigns spent less than the preceding midterm election.
The decline in candidate spending, though, is more than offset by the increase in spending by super PACs and other groups that can accept huge contributions from the ultra-rich.
That means that fewer and fewer everyday Americans are choosing to contribute to campaigns. In fact, less than 1 percent of Americans donate today. And who can blame them for feeling disenfranchised when they see their efforts dwarfed by the mega donors.
At the same time, campaigns are spending less while the special-interest groups are spending more. So we now have a system that discourages voters from participating and engaging, while rewarding and encouraging special interests to participate even more.
“[O]ur nation is facing a crisis of liberty if we do not control campaign expenditures. We must prove that elective office is not for sale. We must convince the public that elected officials are what James Madison intended us to be, agents of the sovereign people, not the hired hands of rich givers, or what Madison called factions.”
Those are the words not of some liberal Democrat. That’s the prescient echo of Barry Goldwater from 30 years ago.
By: Mark McKinnon, The Daily Beast, January 5, 2015
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